Mortgage-Backed Bonds, Spurred 2008 Crisis Are in Trouble Again

[Account Closed]

Once again Mortgage Backed Bonds (Securities) are the only thing holding the housing market together. Why is this a big deal?

1. In 2008 the problem was sub-prime mortgages "guaranteed" by MBS, Mortgage Backed Securities and especially the ones that had adjustable rates. No one knew at the time what the level of risk was (ok, the average person didn't know, but the guys on Wall Street raking in the big fees knew). But it turned out that the average guy paid the price when the music stopped. Since that was 10 years ago, I don't expect the average property investor to remember or understand how it all came down. It wasn't pretty.

Enter 2022

2. So now, the Fed has $2.7 trillion in Mortgage Backed Securities, (MBS) which is way, way, too much and need I mention that the Fed was never designed to fullfil that role. It doesn't have a clue what to do now. Inflation or Recession or Housing Crash. (You don't have enough fingers and toes to count that high) If you wanted to count to 2.7 trillion, counting every secound of your 40 hour work week it would take you 375,000 years. Don't try it.

3. What we do know is that Wall Street always gets their fees, the Fed is not your friend, you don't control the housing market, in fact no one does. (Caveat: real estate is local)

The point is: Buckle Up Buttercup, we don't know where the equalibrium will be from or go to but something has to give.

I'm betting housing will drop 10% to 15% over the next year (for various reasons) . The Stock Market will continue to decline and Bitcoin will hit $10,000 from it's high today of $29,068. 

This does not apply to WA, CA, OR, IL, CO, or NC because investors from there continually post that their areas are immune from "corrections" and "burps" in the market place. Must be nice to have such assurances, the same way investors did in 2008.